Goods And Services Tax Draft Law To Be Finalised In A Month: FinMin

The Union Finance Ministry today quashed reports of draft model law on goods and services tax (GST) being in the public domain and said the draft law will be finalised in a month's time and put up for comments and suggestions from the trade and industry.

GST Draft Law To Be Finalised In A Month

"It is going to take at least another month by which we will be able to finalise the draft law and once that is done we will be putting it up in the public domain and similar process of consultation and regional conferences for interaction with trade and industry will be done, so that we are able to get your comments on the draft law," said Ms Rashmi Verma, special secretary, Department of Revenue while inaugurating ASSOCHAM's 53rd national conference on GST.

"There was talk about draft model law being there in the public domain, but let me clarify the draft model law which has been put up by somebody on the public domain is not the official draft law, in fact we are still working on it," said Ms Verma.

"Whatever is in circulation is just the base paper which was prepared for kicking off the discussion on the draft law and there might be number of changes in it," she added.

"It is a huge tedious process through which we are going, it is a consultative process in which we are involving all states and we look at each clause very-very minutely and only then we will be able to finalise the draft law," further said Ms Verma.

She said that FinMin has also finalised core business processes on the basis of recommendations of the several committees set up by the Empowered Committee and the ministry has received number of valuable comments from the industry.

"We have set up a committee which is looking at each of your suggestions and this sub-committee which consists of some of the state government officers, CBEC officers will be giving their recommendations to the main committee which will be chaired by me and member secretary of the Empowered Committee and we will look at each recommendation made by this sub-committee on the business processes and take a view whether we need to make any changes in these business processes based on your feedback," said Ms Verma.

"Whatever changes are made with that, we will again be making public the revised draft of business processes which will be open for discussion with the trade and industry," she added.

"We have to come up with the law and business processes which will be trade-friendly and much simpler than the existing ones, with that in mind we are working towards finalising the business processes and the draft law," further said Ms Verma.

On the issue of proposed one per cent tax on inter-state movement of goods, Ms Verma said that FinMin has accepted the recommendations of the Select Committee and the cascading aspect of one per cent additional tax will get minimised because this one per cent additional tax will now be only on the sale i.e. on the value addition and not on the supply of goods.

"The fear that every time goods move from one state to another or from one depot to another there will be a one per cent additional tax need not be there because that change has already been made which is now currently in Rajya Sabha for passage," said Ms Verma.

"However, if after consulting various pressure groups, political parties and trade and industry it is felt that we should drop this one per cent, we are open to it and definitely I also agree that with the one per cent going, the GST structure will improve considerably because even if it is going to be there only for two years, there will be some amount of cascading though we are making all efforts to minimise this," she added.

Talking about the preparedness of the government vis-à-vis roll out of GST in 2016, Ms Verma said, "We are fully geared towards rolling out of GST in 2016, our IT infrastructure is going to be in place, we have selected the agency, we have finalised the draft business laws which have been approved by the Empowered Committee, we are in the process of finalising the draft law which will be soon put in the public domain and all other administrative measures which have to be taken have already been taken by the government."

She also informed that IT processes will be ready by the end of January.

In his address at the same ASSOCHAM conference, Mr Najib Shah, chairman, Central Board of Excise and Customs (CBEC) said that trade and industry need to understand that in the GST regime exemption may not be the way to go forward.

"We are in the process of pre-budget discussions and despite the fact that GST is not too far in the horizon, every single industry association starts their discussions only with a series of exemptions which they would like to have," said Mr Shah.

"So long as every tax which you pay across borders are being VATable so that the final product does not have any input taxes you should be comfortable, that really should be your concern and aims rather than look for any exemptions," he added.

Conceding that dispute resolution is going to be a challenge, the CBEC chief said "We have to have uniformity between the centre and the states in the manner in which we handle disputes, we have to ensure that there is least amount of trouble for trade in having resolution to the disputes."

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